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what is the purpose of business activity
to produce goods and services to satisfy customers needs and wants
what is production
the process of converting inputs such as land, labour, and capital into saleable goods
what is productivity
a measure of the efficiency of inputs used in the production process, especially labour and capital
how do you calculate labour productivity
total output/number of production workers
how do you increase efficiency
increase output with the same number of employees
how to increase productivity
improve staff motivation, replace people with machines, staff training
how do we increase efficiency
improve skill levels of workers, motivate workers, introduce better tech
why do businesses hold inventory?
if the business doesn’t have finished goods in stock the customers orders cannot be met efficiently, economies of scale
cons of holding inventory
warehouse payment, shrinkage costs
what is lean production
the production of goods and services with minimum waste
what are the aims of lean production
reduce waste, maintain/improve quality, getting rid of steps that don’t add value to the final product
benefits of lean production
reduces production costs, improved quality of products, increased efficiency
what is the main source of business waste
holding onto high levels of inventory
what is the “just in time” production method
raw materials and components arrive from suppliers just as they are needed by the production process
cons of just in time production
reliance on suppliers, risk of production stoppages, limited economies of scale
pros of just in time production
reduces the cost of holding inventory, flexibility, less risk of overstock
what is kaizen production
continuous improvement
cons of kaizen
constant effort, training costs, slow progress
pros of kaizen
increased product quality, increased efficiency
